This is a tried and true government program used by millions of U.S. residents over the years to purchase their first home. If you ask around, most seasoned homeowners will tell you their first mortgage was an FHA. These are the particulars:
- 3.5% down payment for homes up to $612,950 in San Diego County (other areas may vary).
- Downpayment can come from your own funds or as a gift from a relative.
- Closing costs can be paid by you, the seller or a relative (gifts for closing costs cannot exceed 6% of the purchase price).
- You don’t need perfect credit to get an FHA loan.
- Debt to income ratios are more flexible.
- You will pay what is called Upfront Mortgage Insurance which is rolled into the payment and a monthly mortgage premium included in your payment. Because you are putting so little down, this protects the lender in case of default and allows the FHA program to continue.
FHA 203(k) Rehab Loan
FHA’s 203(k) loan program provides borrowers an affordable, stable financing solution that combines the purchase or refinance of the home along with the costs of the improvements into a single loan. This program is ideal for purchasing foreclosures and improving their value with needed repairs and upgrades.